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Yesterday the Basel Committee on Banking Supervision (BCBS) published a paper exploring the risks of permissionless blockchains and how they can be addressed. Of late, the Basel Committee has emphasized that it doesn’t believe that banks can sufficiently mitigate permissionless blockchain risks. Hence, the crypto rules for banks make it very expensive for them to hold assets on permissionless blockchains, including digital securities or tokenized versions of conventional securities. Digital securities issued on permissioned blockchains are more-or-less treated like conventional securities.
Most public blockchains are permissionless. However, the Basel Committee doesn’t have such an issue with the public aspect. It’s the permissionless aspect that it sees as a bigger problem.
The paper represents the author’s views, not necessarily those of the Basel Committee. It outlines the known issues, such as the risks of a hard fork of the blockchain and lack of oversight over validators. It explores KYC, AML and CFT challenges and the lack of settlement finality on many DLTs.
Retrieved from: https://www.ledgerinsights.com/basel-committee-explores-how-banks-can-mitigate-permissionless-blockchain-risks/
